Many in daily fantasy sports may be wringing their hands as they await the results of the Nevada Gaming Control Board’s legal analysis.
Joe Brennan Jr. is not among them.
Earlier this month at the Daily Fantasy Sports Expo in Miami, we asked the former director of the Interactive Media & Gaming Association about the chances that what happens in Nevada might have cascading negative effects in other jurisdictions.
“None,” was Brennan’s reply. He expounded on that Tuesday.
“It is not likely that a ‘ruling’ against DFS in Nevada has much lasting effect,” said Brennan, now the CEO of startup daily fantasy operator FastFantasy. “First, there is the very inconvenient fact that Nevada regulators permitted real-money fantasy sports in the past.”
Brennan is referring to the betting options offered by Cantor Gaming (now CG Technology) beginning in 2012. As explained by the Las Vegas Review-Journal:
The bookmaker chose a team of five National Basketball Association players every day during the season and allowed bettors to do the same.
Based on a scoring system similar to fantasy basketball, Cantor would set a line on the matchup. Bettors could wager on Cantor’s team or their own against the spread.
“It was very popular,” said vice president of CG Technology Matthew Holt in the article, adding that other games were subsequently added in which players could wager up to $5,000 on football and $2,000 on baseball.
“This is not a trivial fact, as it points to what is really in play here,” Brennan told DailyFantasyTalk. “We’re talking about a real-money sports game that is not controlled by the Nevada gaming corporations, and the only way to put the genie in the bottle is to somehow lead a charge to re-classify DFS. They have two problems: federal law, which has clearly classified it as something else, and stakeholders—the leagues, the teams, and the networks (that have partnered with DFS companies).
“While MGM, Wynn and Caesars are very powerful in Nevada, they are less so in other states, and certainly in Washington D.C.”
Though many observers believe some form of regulation for daily fantasy is unavoidable, Brennan is not alone in his opinion regarding daily fantasy’s powerful allies.
Numerous industry analysts and legal experts have stated a belief that the daily fantasy industry’s high-profile partnerships with major sports leagues, franchises and media conglomerates give it significant insulation against the most stringent oversight or a repeat of online poker’s Black Friday apocalypse.
“The analogy a lot of people like to use, the bearish people on this issue, is that this is similar to what happened with online poker, where all of the sudden you woke up one morning and these sites were shut down and players couldn’t withdraw their money,” industry analyst Adam Krejcik said on the Eric Jackson Podcast in June. “We think this is a much, much different scenario and landscape, and really don’t think that will ever happen. I’m not saying that increased regulation won’t, but again, we kind of fall back to the investments made by very big and powerful companies, and to us, it’s kind of tipped the scale in favor of the DFS companies here.”
We could find out relatively soon what will become of DFS in Nevada. An article published Monday on LegalSportsReport.com intimated that a decision from the Nevada Gaming Control Board could be on its way and raises a number of concerns about what could result. A Las Vegas-based gaming lawyer told DailyFantasyTalk last month that virtually no outcome is out of the question, from mild oversight to a declaration that DFS is sports wagering, which would make it highly impractical for sites to continue operating in the state.
Brennan has his own take.
“A better way forward is for Nevada gaming to find meaningful ways to incorporate DFS into their offering, rather than trying to seemingly stand in the way or seize control of DFS,” Brennan said. “In fact, they had first crack at it, but actually passed on it.
“Also, regulators in other states normally do not take what Nevada regulators pronounce as gospel. Other states’ regulators are definitionally independent, and do what is in the best interest of their states.”